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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $85,000 $93,000 Total variable costs 50,150 53,940
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $85,000 | $93,000 | ||
Total variable costs | 50,150 | 53,940 | ||
Total contribution margin | $34,850 | $39,060 | ||
Total fixed costs | ||||
Avoidable | 31,618 | 16,949 | ||
Unavoidable | 24,842 | 15,031 | ||
Profit | $-21,610 | $7,080 |
If X Company drops Product A because it shows a loss and is able to use the vacant space to increase sales of Product B by $36,600, with $3,000 of additional fixed costs, what will be the effect on firm profits?
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